April 2021: Are you ready for the changes coming into force?
This April sees a number of changes for employers. Many companies have started and, in some cases, nearly completed, their preparation for the new IR35 tax regime relating to use of contract workers, which applies from 6 April 2021. Kevin Barrow, partner in our Contingent Workforce team, will be looking at the most common errors and how to avoid associated costs in our webinar on 16 March 2021 – register here. Further changes to the new IR35 legislation were announced in Spring Budget 2021, including correction of an error in the 2020 Finance Act, a rule to target IR35 avoidance, obligations for intermediaries and updated "fraudulent documentation" measures.
The maximum compensatory award for unfair dismissal increases to £89,493 (from £88,519) (or 12 months' pay if lower) where the effective date of termination is on or after 6 April 2021 and the maximum weekly pay rate for calculating the unfair dismissal basic award and statutory redundancy payment increases to £544 (from £538).
Changes to statutory pay rates have also been announced:
- 1 April 2021: The new national minimum wage (NMW) rates will be as follows:
- Age 23 or over: £8.91 (currently £8.72).
- Age 21 and 22: £8.36 (currently £8.20).
- Age 18 to 20: £6.56 (currently £6.45)
- Age 16 to 17: £4.62 (currently £4.55).
- Apprentice rate: £4.30 (currently £4.15)
- 4 April 2021: Rate of statutory maternity, paternity, adoption, shared parental and parental bereavement pay increases to £151.97 per week (currently £151.20).
- 6 April 2021: Rate of statutory sick pay increases to £96.35 per week (currently £95.85).
Private sector organisations with 250 plus employees will need to report on their gender pay gap on 4 April, although the Equality and Human Rights Commission has indicated that due to Covid-19, enforcement will be delayed for six months until 5 October 2021, providing employers with some breathing space.
Following on from a recent High Court decision changes are also being made from 31 May 2021 to the Employment Rights Act 1996 to extend protection from health and safety detriment to workers (employees are covered under existing provisions).
Other reforms later in the year are not off the cards. We await the outcome of the recent consultation on the reform of non-competition provisions. However, with many businesses looking now at their post Covid working models, the government may take the opportunity to make flexible working the default (this was in the Conservative party's election manifesto). Liz Truss, the UK Minister for Women and Equalities has called for flexible arrangements to be made standard following research published by the government backed Behavioural Insights Team and jobs website, Indeed. We may also see the government push forward proposals for ethnicity pay gap reporting following the petition back in 2020 (a date for a parliamentary debate is still awaited, as well as the outcome of the consultation which closed back in 2019). A call for developments in this area is also reflected by the Women and Equalities Committee in its report "Coronavirus and the gendered economic impact", which makes a number of recommendations in light of the inequalities exposed by Covid-19, including a call on proposals for ethnicity and disability pay gap reporting to be published in the next six months. Other potential reforms on which we are waiting further developments are set out in our regulatory update for employers.
Managing Risk in a Transforming World: Has your approach to Subject Access Requests kept up with the law and guidance?
Businesses are embracing the value of processing personal data about their customers and employees, and as a result, are holding more of it. Meanwhile, the general public are becoming more aware of their rights in relation to their personal data (primarily as a result of the introduction of GDPR, and frequent multi-million pound headline-grabbing fines from the Information Commissioner's Office (ICO) for data breaches). Disputes lawyers acting for employees, shareholders or any other individuals are also now routinely recommending the use of Subject Access Requests (SARs) in order to gain leverage and early disclosure.
Many data controllers put in place processes to deal with SARs in response to the introduction of GDPR in 2018, but given Brexit, developments in the law, and updated ICO guidance these processes must now be reviewed and updated. We set out the key issues for consideration here. If you would like any assistance or advice on handling SARs, Osborne Clarke offers a comprehensive and cost-efficient SAR service which helps data controllers manage and meet their obligations. Olivia Sinfield leads our GDPR for HR team and will be happy to discuss how we can support you.
Employees may potentially transfer to more than one employer on an outsourcing
The Employment Appeal Tribunal (EAT) has held that in an outsourcing situation it is possible for the employment contract of a transferring employee to be split between transferees in proportion to the tasks performed by the employee. There is therefore no reason why an employee cannot be employed under multiple contracts of employment by different employers following a transfer as long as the work attributable to each contract is clearly designated.
Following this decision it will now be important to assess in an outsourcing situation, where more than one service provider is being assigned, whether it is possible to identity the activities that are transferring and whether they remain fundamentally the same albeit split between service providers. Where the services are being fragmented it may not be possible to identify an organised grouping in respect of each transfer.
Where it is possible to identify an organised grouping it will now be essential to identify at an early stage how employees are assigned to the services transferring and therefore whether they will transfer to just one or more than one incoming service provider. Businesses entering into outsourcing arrangements will now need to factor in the additional possibility of employees transferring to multiple transferees and negotiate indemnities accordingly.
The EAT's decision follows on from a previous European Court of Justice (ECJ) decision which looked at this in the context of the relevant European directive. However, the ECJ did caution that a transfer to multiple transferees was subject to this not adversely affecting the workers' rights and working conditions. This point was not addressed by the EAT but underlines that businesses outsourcing services to multiple transferees must carefully consider the impact of the transfer on transferring employees terms and conditions. The case has been remitted back to the ET to determine on its facts.